What Does “Policy Limits” Mean?

I have heard about people seeking "policy limits" in car wreck cases.    What does that mean?

"Policy limits" refers to the sum total of liability insurance policy dollars that are applicable to a given case.

So, if a person has $300,000 of insurance on their car and they cause a wreck that injures someone else, a policy limits demand by the injured party is a demand that the insurance company pay $300,000 to settle the case.

The mere fact that there is $300,000 of insurance does not mean that the insurance company must pay that amount, regardless of injury.  Rather, it is the most the insurance company can pay – it is the "policy limit."